When is a benefit being duplicated?

[CTipper]

I'm hoping someone out there has had this happen to them or knows where to look for a specific answer.

I have a December year end plan with a plan provision that requires 1,000 hours to accrue a year for benefit accrual purposes.

The participant in question reached normal retirement age and worked past their normal retirement date in 2001.

Prior to retiring in 2001 she worked more than 1,000 hours in 2001.

She retired, requested and received a lump sum distribution of her entire benefit.

The second week of December she returns to work on a part time basis.

She has not worked more than 1,000 hours in a plan year since before she retired in 2001.

But, she returned to work in the same plan year that retired in.

The plan has a clause about not duplicating the benefit.

It's easy to see that we don't use the compensation earned prior to returning to work.

Her years of service for benefit accrual purposes aren't used, etc.

However, as she was employed on 12/31/2001 and she did earn over 1,000 hours of service during the entire calendar year, I'm having a hard time finding out whether or not she should get a year for 2001.

Anybody got any help on this?

Thanks

Christopher

[Blinky the 3-eyed Fish]

The plan document of course will control and I would recommend reading it carefully. That being said, the typical fashion in which this works that I've seen in documents would be to first determine the benefit without regard to the fact she took a prior distribution. Compare the plan benefit earned and the actuarial equivalent of the benefit for being past retirement age (this can be calculated different ways too depending on the doc). Take the greater of the two. Reduce the amount for the actuarial equivalent of the benefit paid.

If her compensation earned after coming back in 2001 would have affected her benefit, she would be due an additional amount. Again though, check the doc.